Holding a role in a company as its director comes with a lot of responsibilities and risks. This is why you must know how to protect yourself with the help of a deed of indemnity, especially if the company is owned by more than one person.
This article will teach you how to create a deed of indemnity and the many ways it can help you.
Deed of Indemnity
Table of Contents
Components of a Standard Deed of Indemnity
When you’re drafting a deed of indemnity, it’s important that you include these essential elements:
1. Definition and scope
The deed should have a clear definition for every key term used. This includes the liability, claim, and company.
As for the coverage, you should choose a deed that can provide unlimited coverage. This means that you will continue to be protected even if you are no longer a director in the company.
2. Indemnity clause
This section in the document should outline the extent wherein you will be covered by the company as its director. Standard indemnity clauses usually indemnified directors to “the maximum extent permitted by law.” What this means is that there are circumstances wherein clauses will exclude indemnity, such as criminal, dishonest, and fraudulent behavior.
If you are writing a deed, be clear on how you wish to be covered by the company. Include information on legal costs and who will be paying these.
3. Document access
It’s also important that you include document access in your deed of indemnity. This ensures that you will continue to have access to important company documents, especially if you need them for any court proceedings.
4. Insurance
Directors and officers have a separate insurance from the company. The deed will make sure that the D&O insurance will maintained and paid for by the company.
5. Extra Protections
You can also get protection if the company you work for is part of a larger group. The parent company may be able to guarantee your indemnity and help protect you if you face risks or penalties as the director.
Deed of Indemnity
Download the Deed of Indemnity Form
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Best Strategies When Drafting A Deed of Indemnity
In the process of a deed of indemnity creation, there are some things that can help you create a strong deed. Here are some tips that you should remember when writing your deed:
- Have a thorough understanding of the agreement – As with any contract, it’s important that you have a comprehensive understanding of the agreement or the transaction. Learn about its potential risks, losses, and liabilities so you can find a way to cover them.
- Customize the indemnity provision – Tailor the provision according to your specific needs and circumstances. This will allow you to get thoroughly protection and a way to allocate the risks.
- Specify any indemnifiable event – Be clear in your deed and identify the circumstances or events that may trigger the indemnity obligation. You might want to use a non-exhaustive list of specific events so that any unforeseen situations may still be covered.
- Have a lawyer review the deed – When you are writing your deed of indemnity on your own, it’s best that you have a lawyer review it. This will ensure that the document can fully protect you as the director of the company.
Utilizing Fill For Your Deed of Indemnity
If you are trying to learn how to write a deed of indemnity and you do not have a lawyer who can help you out, you can use Fill’s ready-made template. This will save you time and money in trying to draft your deed of indemnity.
Sign up for free today to check out the different templates available on our website.
